Fla. Nixes Citizens’ Plan; Bans Hiring of Lawyers for Rate Appeals

By Brian H. Kern | September 19, 2006

Florida Governor Jeb Bush and his Cabinet have rejected a proposed plan of operation for Citizens Property Insurance Corporation and instead ordered the state’s insurer of last resort to hold a series of public hearings before submitting a new plan.

The administration also decided to prohibit Citizens from hiring outside attorneys to sue the state for higher rates under certain circumstances, unless the hiring is first approved in public meetings by the corporation’s board of directors and by the Governor and Cabinet.

Bush, Agriculture Commissioner Charles Bronson and Chief Financial Officer Tom Gallagher supported motions offered by Attorney General Charlie Crist, who is the Republican candidate to succeed Bush as governor, to reject the business plan and ban the hiring of outside lawyers.

Since May, the insurer has filed four petitions seeking to overturn agency orders calling for rate reductions, and in each instance hired a private law firm to sue the taxpayer-funded agency.

“Citizens Property Insurance Corporation used homeowners’ money to hire attorneys so they could sue the government, in order to force policyholders to pay even more,” said Crist. “The taxpayers were paying to sue themselves, so that some of them could pay even more. This is totally unacceptable.”

Florida law requires that a plan of operation for Citizens be approved by the Governor and Cabinet by Oct. 1. Crist proposed a provisional order to guide the insurer’s actions until a permanent plan can be submitted no later than Jan. 31, 2007.

The business plan order requires Citizens Property Insurance Corporation to hold at least three public hearings around the state before the end of the year to obtain public comment on how to meet its statutory obligations related to efficiency and customer service. The insurer must then develop a new plan that includes a “declaration of rights” for policyholders.

“Citizens Property Insurance Corporation seems to have forgotten that it was created to serve people during their time of great need. It seems to have forgotten that the people of Florida are the boss, and the corporation is there to serve them -— not the other way around,” said Crist. “It’s time we remind Citizens Property Insurance of its statutory and moral duty to the people of Florida.”

Rocky Scott, public information manager for Citizens, said the organization will do everything necessary to comply with the orders. “We take these things very seriously. We’re in the process of putting hearings together – it could take several days to schedule.”

Scott said Citizens’ mission statement is to “put ourselves out of business.”

Latest Comments

  • September 21, 2006 at 9:18 am
    jr says:
    I believe the Citizens board has just as much responsibility to the people of Florida that are NOT insured by them, if the rates are not adequate it is the 80% of the state th... read more
  • September 20, 2006 at 4:23 am
    tom says:
    This is, of course, insane. The board runs Citizens, not the governor and the cabinet. If Citizens is supposed to charge actuarially sound rates, then they have a duty to cont... read more
  • September 20, 2006 at 12:55 pm
    nomm says:
    Jeb and the Cabinet just made it near impossible to be a good fiduciary by trying to collect enough money to pay catastrophe claims. Good thing the board has statutory immuni... read more
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